Foreign graduates in Sweden: the role of high tech sectors, STEM disciplines and cultural distance

Claudio Fassio and Ioana Igna

What do we know about foreign students’ international careers?

Many studies in the last decade have convincingly shown that skilled immigrant workers provide substantial benefits to the host countries in terms of technological development, knowledge circulation, innovation and ultimately productivity growth.

Among the categories of skilled immigrants that may provide new knowledge and competences to the host countries, the existing studies has seldom considered the role of foreign students, i.e. students enrolled in a foreign university. This is unfortunate since the international mobility of students represents a non-negligible portion of the overall phenomenon of high skilled mobility. Already in 2010, the total number of international students worldwide reached 3.5 million. The sustained growth in the number of foreign students enrolled in foreign countries in recent years has led to an increasing interest by policy makers and businesses. Individuals that graduate in a foreign country are considered as valuable talents who, thanks to their knowledge and skills, foster the competitiveness of the firms in which they are employed and ultimately of the host countries. Indeed, in many developed countries the acknowledgement of the importance of foreign graduates has also led to the introduction of policies (e.g., special work visas) specifically targeted at retaining foreign students in the host countries.

Foreign students and their careers in Sweden

In this study we analyse the employment choices of foreign graduates, as compared to those of native graduates, in the Swedish economy. Sweden in recent years has witnessed a sustained increase of the overall share of foreign students in its universities, so it represents an interesting empirical case. Where do these international students end up working, after graduation?

We look at the sectors in which foreign students start working after graduation. We propose that foreign students will be more likely to work in sectors in which knowledge bases are more codified and analytical, and there is no big role for tacit knowledge or communication skills. We also suggest that foreign students will be more likely to work in sectors with a higher growth of demand for skilled workers.

We use data about the foreign students who graduated in Swedish universities in the period 2000-2014 and remained in the country after graduation to work for a private firm.  Our data allows us to identify these students and to follow their careers over time. Overall, we follow the careers of almost 4,000 foreign graduates and compare them with approximately 170,000 Swedish graduates.

Our results show that foreign graduates are more likely than Swedish graduates to work in high-tech manufacturing (pharmaceuticals, computer, electronics, and optical products) and in high-tech services (telecommunications, R&D and IT), and in services with lower knowledge intensity (LKIS), which span from retail trade to accommodation and food services. We interpret this as confirmation that high tech sectors with codified and analytical knowledge better suit the competences of foreign graduates. When it comes to the higher propensity to work in less knowledge intensive services (LKIS) we attribute it to the fact that this sector is expanding over time, hence to a demand effect.

When we check for the actual occupations that foreign students are employed in, we find that in the high-tech sectors they mostly work in occupations that are appropriate for their training, while in the less knowledge intensive services (LKIS) there is some evidence of employment in lower-skilled occupations (overeducation).

Overall, our results suggest that in recent years foreign students are to be considered an important source of new competences and skills in the high-tech sector in Sweden, both in manufacturing and in services. This hints at the fact that policies aimed at the attraction (and retention) of foreign graduates can have a positive impact on the local pool of human capital, from which high tech sectors firms can hire their new employees. The results also speak to the ability of the Swedish economy to absorb and integrate the foreign students trained in their universities.

On the other hand, the higher probability to be employed in services with low knowledge intensity (LKIS) suggests that some foreign graduates may be employed in jobs which may not require a university education. Our results show that this effect fades away after a few years from graduation, when foreign students find an employment that is appropriate for their education. However, policies should make sure to avoid that foreign university graduates star their career in jobs for which they are over-qualified, as this represents a mismatch between their potential and actual contribution to the host economy.

Our results call for more studies analyzing the transition between education and work for international students. We believe that these results also call for a better coordination between education policies put in place by universities and industrial policies, labour market policies and migration policies. While foreign students have an important place among education policies, as universities aim to attract foreign students (sometimes also to have a higher number of fees-paying students), this category of students is seldom considered among industrial and labour market policies. In the case of immigration policies sometimes these even prevent foreign students from staying in the host country after graduation, especially if they come from visa-requiring countries. The alignment between these policies should make sure that organizations and institutions – such as migration offices or labour legislations – do not create too many constraints and limitations to the possibility for foreign graduates to pursue a career in the country in which they earned their education.

The full study is available here: http://wp.circle.lu.se/upload/CIRCLE/workingpapers/202202_fassio.pdf

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Claudio Fassio is a Senior Researcher at the Department of Political Science of the University of Pisa, Italy. He is also affiliated to the research centre CIRCLE, University of Lund. Claudio’s research interests include the impact of skilled migration on innovation, and the interplay between innovation and internationalization strategies of companies. His work has been published on international peer-reviewed journals such as Research Policy, Journal of international Business Studies, Oxford Bulletin of Economics and Statistics and Industrial and Corporate Change.

Ioana Igna is a Research Fellow at the Strategy and Innovation Department of Copenhagen Business School. Ioana earned her PhD in Economics and Management from the University of Perugia (Italy) in 2017 and has been Research Fellow at the National Institute for Public Policies Analysis (Italy), Lund University (Sweden) and Amsterdam Business School (Netherlands). Her research interests are in the area of economics and management of innovation, the role of AI in innovation activities and how labour market mismatch affects inventors’ productivity.